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Cloud Adoption in the Investment Industry: Survey Results Part 2

By Kaleigh Alessandro | Tuesday, June 12th, 2012

Last week, we revealed Part 1 of our cloud adoption trends survey results and detailed how hedge funds and investment firms are currently leveraging the cloud, as well as what kinds of cloud deployment models they are using (private clouds take the cake).

Some additional data points we learned as a result of this survey include the driving factors influencing firms’ decisions to use the cloud, potential barriers to cloud adoption and the key evaluation criteria for cloud services providers. Let’s take a closer look at what survey respondents had to say relative to these categories.

Factors Influencing the Decision to Use the Cloud

There are a multitude of factors that alternative investment firms need to take into Factors Influencing Cloud Decisionsconsideration as they evaluate cloud offerings. Survey respondents were asked to rank the importance of several factors related to their cloud decision-making, including cost, flexibility, functionality and speed.

The majority of respondents interestingly noted that all factors provided were either important or extremely important to their organization’s decision to use the cloud now or in the future. Overwhelmingly, 86 percent of respondents ranked the use of the cloud for reducing IT infrastructure investments as important or extremely important.

Increasing the speed of technology deployment was a close second when it comes to factors influencing cloud purchases. 83 percent of respondents ranked it as important or extremely important, and, like cost, only 6 percent consider it an insignificant factor. Particularly for startup firms, the appeal of getting up and running quickly is a great one. Traditional, on-premise infrastructure solutions can take six to 10 weeks to design and implement. Cloud solutions, on the other hand, can take a fraction of that time, with some smaller implementations requiring only days for deployment.

In addition to cost and speed of deployment, another important factor ranked as significant by respondents was the ability to simplify IT management and support. While some alternative investment firms like the ability to control IT in-house and manage the infrastructure from within, the appeal of outsourcing day-to-day functions and support to a third-party cloud provider is a hard one to pass up. Particularly as roles and responsibilities change to increase operational efficiencies, professionals at many firms who were previously responsible for technology are juggling a variety of new tasks.

As firms grapple with increased regulatory requirements and oversight as well as compliance issues and investor demands, they may choose to utilize the cloud as a means to delegate their traditional IT responsibilities and focus on their core competencies. Within this survey, 82 percent of respondents said simplified IT management and support was an important or extremely important factor; 5 percent responded that it was not very or not important at all.

Barriers to Cloud Deployment

While the cloud does hold distinct advantages for alternative investment firms, it should not be a decision that is taken lightly for any firm. Just as significant as the factors influencing the move to the cloud, we also asked respondents to rank the significance of certain barriers or concerns with cloud computing.

As you might expect, respondents ranked concerns about cloud computing security (i.e. risk of unauthorized access, data integrity, etc.) as significant or extremely significant 86 percent of the time.

Second to cloud security, concerns about information governance or meeting regulatory or compliance requirements were also seen as significant or extremely significant barriers to cloud adoption. 71 percent of respondents ranked this factor as significant to them. Regulatory pressures have increased exponentially in recent years, particularly with the introduction of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Additional “barriers” ranked significant or extremely significant by respondents include:

  • Investors/clients are not receptive to cloud computing (62%)

  • Concern about lack of custom application availability or integration (61%)

  • Fear of outgrowing or overpaying in the cloud (59%)

  • Fear of vendor lock-in (54%)

Evaluating Cloud Services Providers

Finally, we asked respondents to provide guidance on what they use for evaluation criteria of cloud services providers. Cost continues to be a significant factor for nearly all firms currently using or considering using the cloud, as evidenced by 84 percent of firms ranking it as important or extremely important to their cloud provider evaluation process. Only 4 percent of firms ranked this factor as not very or not at all important.

Secondary to cost, alternative investment firms also find value in cloud services providers who have knowledge of and expertise within their specific vertical. Eighty-one percent (81%) of firms reported this as an important or extremely important factor, and just 6 percent ranked it as not very or not at all important.

Evaluating Cloud Services Providers

Other factors ranked as important or extremely important by firms surveyed included experience in establishing security procedures (82%), proven post-sales support and service (82%), the cloud provider’s technology infrastructure (81%), certified application availability (80%), innovative ideas and expertise regarding cloud trends (78%), prior experience with the vendor (74%) and geographic reach and global support (70%).

To download the complete 18-page survey report, Cloud Adoption Trends within the Investment Management Industry, click here.

Download the complete report now

Photo Credits: Eze Castle Integration

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